Microfinance Initiatives: Planet Rating

(offers "thin" rating)

Planet Rating has developed a Social Performance Rating that provides an opinion on the capacity of an MFI to achieve its social goals. It is based on an audit of Social Performance Management systems and relies on social accounts available at the MFI level and secondary data about the country social and economic environment. Social performance outcome measurements, when available at the MFI level, are checked for reliability and integrated in the rating report. The evaluation covers four dimensions (1) Institutionaliza-tion of the social mission (2) Outreach (3) Service Offering (4) Social Responsibility.

Planet Rating's Social Performance Ratings are conducted with a transparent methodology and in an interactive mode and can be preceded by a training to ensure an optimal appropriation of the conclusions of the audit. The four areas of SPR are scored from "1" (lowest) to "5" (highest). For each of them, they evaluate the intentions (clarity and consis-tency), implementation (efficiency) and results (comparison with benchmarks). A weighing system is then applied in order to obtain a global rating from the scores assigned to each area.

5. Advanced: Long-lasting commitment to social goals; efficient management of social performance and social responsibility risks; institution very likely to achieve a positive social impact.

4. Convincing: Clear commitment to social goals; reasonable management of social performance and social responsibility risks; institution likely to achieve a positive social impact

3. In progress: Clear intent to reach social goals; social perfor-mance management systems being implemented

2. Incipient: Clear intent to reach social goals; low capacity to manage social performance

1. Intangible: Intention to reach social goals is non tangible; low level of management of social performance

As Planet Rating considers institutional sustainability to be a key element of social performance, Social Performance Ratings are only conducted for MFIs that have already undergone an institu-tional rating by a reputable microfinance rating agency. Missions can be conducted at the same time as GIRAFE rating missions or within the 6 consecutive months. The specialized social rating analyst spends 2-4 days on-site. Social Performance Rating fees are approximately half of GIRAFE rating fees. Combining GIRAFE and Social Performance processes provides efficiency gains that are reflected in the prices. Planet Rating's methodology has been refined through on-site test-ing and collection of feedback from actors within the sector (MFIs, investors, donors, social performance specialists) during 2005 and 2006. Testing and probing has been conducted with 8 MFIs from different regions, legal status and stages of development. In 2006, the draft methodology was used for 6 MFIs in Mali.

The final methodology was used for 4 ratings in Ethiopia in July 2007 (3 reports already available upon request at rating@planetrat-ing.com: Buusaa Gonofaa, AVFS, SFPI). Others are planned for Q4 2007 and Q1 2008 in Africa and Latin America.

More details and social rating reports available on www.planetrating.com. Con-tact Emmanuelle Javoy at ejavoy@planetrating.com.